Monday, September 15, 2008


Wall Street hell

Oh, yeah. I've been watching and reading about it. Just don't have the heart to talk about it much. Y'all, feel free. Maybe it'll spark me up some.

One remark: If this country is actually stupid enough to elect yet another damned liar, trickle-down, "free"-market worshiping Republican idiot as president, especially a moron who says he can rein in "greed" and "ignorance" from the White House, as McCain declared today, then this country deserves every damned result that follows.


Fannie Mae is the biggest single source of money for mortgages in the United States. From 1998 to 2004, the years covered by the OFHEO investigation, it was headed by former Clinton budget director Franklin Raines, whose top management team included former Clinton Justice Department official Jamie Gorelick, sometimes mentioned as a future attorney general in a Democratic administration. During that period, the report says, Raines and his team grossly overstated Fannie Mae’s earnings — to the tune of $10.6 billion — for the purpose of paying themselves big bonuses. “By deliberately and intentionally manipulating accounting to hit earnings targets,” the report says, “senior management maximized the bonuses and other executive compensation they received, at the expense of shareholders.”

In doing so, the report says, Raines and his team steered Fannie Mae far afield from its original mission, transforming it from a stable business into a risky one. Fannie Mae has its roots in the New Deal, when it was established to increase the amount of money available for mortgages. Over the years, its main business has been to issue debt and then use the proceeds to buy mortgages from lenders, allowing those lenders to give out new mortgages. Originally a government agency, Fannie Mae went private in 1968, with the goal of “increasing the availability and affordability of homeownership for low-, moderate-, and middle-income Americans,” according to its mission statement.
- Byron York, White House Correspondent.

Of the 354 lawmakers who received money from Freddie and Fannie between 1989 and 2008, Sen. Chris Dodd received the most. But next was . . . drumroll . . . Barack Obama. Yup. And he was only there for three years. Not too much went to John McCain, about a sixth of what Obama received (h/t Glenn Reynolds.)

All the information is not out yet about Lehman Brothers and Washington Mutual and all, but you can bet that that will lead back to Democrats as well.

Make all the political hay you need to to make yourself feel better, but this latest economic mess is not the fault of Republicans, my friend.

It just ain't.
And don't forget, McCain says he wants more deregulation. Great idea, obviously. That's worked so well so far.

Start stocking canned goods.
One, greed and foolishness knows no party. It's CONSERVATIVES I'm railing against, who happen to be mostly Republicans.

Two, I don't know what this means: "Of the 354 lawmakers who received money from Freddie and Fannie between 1989 and 2008 ..." Looks like I would have heard about 354 members of Congress getting out-and-out bribes, so that can't be what you mean. What do you mean?

As for political hay: It's already cut and lying there, so I'm sure going to rake and bale it rather than let it rot.
I mean, your comment says it itself:

"Raines and his team steered Fannie Mae far afield from its original mission, transforming it from a stable business into a risky one. Fannie Mae has its roots in the New Deal ..."

They're the problem, not the original DEMOCRATIC orientation of Fannie! So, maybe ya got me on Raines et al., being losers. If so, hang 'em from a tall tree. But don't be so naive as to confuse that with a failure of policy.
Anon said: "Make all the political hay you need to to make yourself feel better, but this latest economic mess is not the fault of Republicans, my friend."

Ever hear of the Keating Five?

"Political hay", our prisons are full of dumb ass thinking like this. I didn't do it. I'm not responsible. See those guys over there they did it too. I'm innocent. It is this kind of hate that make me want to give it back to the re-Publicans in kind. You would think that Bill Clinton was the most powerful President we have ever had and George W. is an innocent victim of Clinton meanness.
Under the rePublican Leadership of all branches of Government gasoline has gone from less than $2 to $4 , We have gone from around a $270 billion dollar surplus to around a $300 billion dollar overspend. Our National debt has doubled. In all of this the McCain economic advisor (Phil Graham) said it is only "a recession of the mind" and that "Americans are whiners".

What's needed today according to Graham is that we need to "Invest".
Does that sound like "W"'s advise to "spend". God have mercy on all of us with these guys in charge.

It is long past time to be civil to the rePublican stupidity being spewed by powerless wantabes and camp followers. Time to clean the gene pool.

Yesterday Americans lost $500,000,000,000 or 4.5% of their wealth. So far today it is bouncing like a ping pong ball based mainly on rumours. The most popular Wall Street description of what is happening is that it is a "category 5 economic storm".

If we keep using tax money to bail out (they call these "bridge loans now) all thes credit morons then we taxpayers will be homeless but will own a whole lot of bank buildings in New York City. but the rePublicans will not be responsible for it, no not them guys.

So Anon et. al. welcome to your great Grandparents' America. Shop early for Xmas guys before the American Dollar shrinks even more.
Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

- Senator John McCain

Rant and rave all you want, guys.

It isn't going to work this time.

This mess is not the fault of "re-Publicans", as you childishly put it.

As a matter of fact, had Republicans like Senator McCain been listened to years ago, the corruption could have been dealt with before it all crashed.

This is not the fault of Republicans, no matter what you guys think.

The facts simply are not on your side.
By the way, the McCain speech that I posted came from the Congressional Record, May 25, 2005.

The bill was blocked by Democrats, and died.

(This stuff isn't hard to find.)

Mr.Redneck, aren't you supposed to be some sort of journalist, or something? Seems to me that you should be better informed.
To Anonymous, whomever you may be - "facts"? There is a very well-known blogger out there who says "facts are stupid things". This isn't only about Fannie Mae and Freddie Mac. It isn't only about Bear-Stearns, Lehmann Brothers, or AIG. It's about an entire system - financial speculation - that was de-regulated in the 1990's (including the repeal of the Glass-Steagall Banking Act, a Depression-era regulatory measure that spearated investment and private banking) in order to make high-yield but risky investments for short-term profit. This led, inexorably (along with a Federal Reserve System that kept credit pretty open for a long time), to the temptation to make risky property investments through higher-than-average mortgages on the margins. The "housing bubble" was actually a "mortgage bubble" and it went on for at least a year after many started to warn that the entire thing was teetering.

Well, it not only teetered, but tottered right over. Home values, over-priced due to artificial demand (artificial because the market for homes was inflated due to risky mortgage practices), sank, leaving people with negative equity, and some people losing their homes altogether. Banks were stuck with mortgages that would never be repaid, on properties that weren't worth the value of the outstanding balance, let alone the original selling price.

All this "value" simply evaporated. Suddenly, all these banks had a lot less money than they thought through the simple collapse of a market. When banks suddenly find themselves with less money, it's kind of a big deal.

As far as the accounting practice you note - inflating earnings, holdings, etc. - does the name "Enron" mean anything? Again, it was deregulation and lack of oversight by both Congress and executive Branch regulatory agencies under Republican control that led to this mess. It's their world, we just have to pick up the pieces.

It's about Ronald Effing Reagasn and every demonic fantasy that airheaded son-of-a-bitch* unleashed on this country.

* no reflection on his immortal soul.


What part of this, my words, is unclear? "Raines and his team steered Fannie Mae far afield from its original mission, transforming it from a stable business into a risky one. Fannie Mae has its roots in the New Deal ..." Raines et al.? Hang 'em, high. Alao, if the Dems blocked it, I assert as an article of political faith that there were worse demons about to be unleashed by the McCain bill.

Three. Go ahead and decloak, Tug. You ain't worth a damn at hidin' yerself.
Not tryin' to hide...

Just ain't worth loggin' in over here.

ER, you blame your demons and I'll blame mine.

But I'm not letting you shift the blame for this mess to the Republican Party, or Conservatism.

Not this time.

Your boy Obama is dirty here, and you are trying to redirect the focus.


This whole mess would never have happened if the Government had stayed out of the Mortgage Market business, from backing lenders to regulating policy regarding who should and should not get home loans.

The Free Market deals with this sort of stuff when left alone to do so.

It does not cause it.

If you believe it does, then continue in your ignorance.
Oh, bite it. I'll continue in my utterly unabashed observation that the only thing that keeps the "free market" from eating us alive is regulation. And the problems on Wall Street stem from too little of it.
Like I said... Continue in your ignorance.
"This mess is not the fault of "re-Publicans", as you childishly put it."
Gee thanks, I've been trying to let out my inner child lately.

As I said before, remember the Keating Five?

Remember Peabody Coal and Black Mesa and the forcible removal of 3000 Navajo families?
Snort! I will continue thanking God every day that our mixed economy has a strain of socialism -- or at least socialistic thinking -- that comes in to clean the place up when the "free"-marketers leave it so effed up there is no other choice. Bring. It. On.
recycled comment:
Hot Damn! I just bought AIG! No Shit! Well, me and the rest of the United States Tax payers. I'm paying $285 towards my share of AIG. That's $85 billion for a "bridge loan". Guess what though. If AIG doesn't make it, we get to keep it.
The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger Savings and Loan crisis of the late 1980s and early 1990s. The five senators, Alan Cranston (D-CA), Dennis DeConcini (D-AZ), John Glenn (D-OH), John McCain (R-AZ), and Donald W. Riegle (D-MI), were accused of improperly aiding Charles H. Keating, Jr., chairman of the failed Lincoln Savings and Loan Association, which was the target of an investigation by the Federal Home Loan Bank Board (FHLBB).

After a lengthy investigation, the Senate Ethics Committee determined in 1991 that Alan Cranston, Dennis DeConcini, and Donald Riegle had substantially and improperly interfered with the FHLBB in its investigation of Lincoln Savings. Senators John Glenn and John McCain were cleared of having acted improperly but were criticized for having exercised "poor judgment".

All five of the senators involved served out their terms. Only Glenn and McCain ran for re-election, and they were both re-elected.

Nice try.

If you will notice, the three of the Keating Five who were convicted of wrongdoing were all Democrats.

The only Republican involved was cleared.


And besides, that was twenty years ago.

In this situation that we find ourselves RIGHT NOW, TODAY, Obama is dirty.

Facts are stubborn things, and I'm sorry that you guys are on the wrong side of this one.

Indeed Tug, "facts" are easy to find and cull to one's advantage. So from the same source you used, here's a bit more:

"McCain and Keating had become personal friends following their initial contacts in 1981,[10] and McCain was the closest socially to Keating of the five senators.[21] Like DeConcini, McCain considered Keating a constituent as he lived in Arizona.[18] Between 1982 and 1987, McCain had received $112,000 in political contributions from Keating and his associates.[22] In addition, McCain's wife Cindy McCain and her father Jim Hensley had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, when he learned that Keating was in trouble over Lincoln.[6][23]"


"Not everyone was satisfied with the Senate Ethics Committee conclusions. Fred Wertheimer, president of Common Cause, which had initially demanded the investigation, thought the treatment of the senators far too lenient, and said, "The U.S. Senate remains on the auction block to the Charles Keatings of the world."[33] Joan Claybrook, president of Public Citizen, called it a "whitewash".[33] Jonathan Alter of Newsweek said it was a classic case of the government trying to investigate itself, labelling the Senate Ethics Committee "shameless" for having "let four of the infamous Keating Five off with a wrist tap."[34] Margaret Carlson of Time suspected the committee had timed its first report to coincide with the run-up to the Gulf War, minimizing its news impact.[33] One of the San Francisco bank regulators felt that McCain had gotten off too lightly, saying that Keating's business involvement with Cindy McCain was an obvious conflict of interest.[35]".


So don't be so damn smug.

Your "boy" (yes I caught that reference) John still needs some scrubbing up as well.
And how about the Peabody stuff, got some facts there? That one is still alive and hanging. He's lucky those are Navajos he's screwing with. The Comanches would have fixed his wagon years ago.
And oh yes, there is this:
"Long story short, John McCain who hates lobbyists and celebrities decided to spend his seventieth birthday partying on a yacht off the shore of Montenegro with an Italian con man and his movie star girlfriend, a meeting organized by a lobbyist who also happens to be McCain’s campaign manager."

See the video:

It doesn't seem that McCain has learned his leson from the Keating thing does it?

How does that change the fact that Obama has his hand in the Sallie Mae cookie jar up to his shoulder right now, and the whole crash was caused by mismanagement and fraud perpetrated by former Clinton cronies in high places? (Do you recognize the name Jamie Gorelick?)

How does that change the fact that John McCain co-sponsered a bill in 2005 that would have averted this tragedy?

How does any of that make this situation the fault of Republicans, or free-market capitalism?


Nice try.
Your "boy" (yes I caught that reference) John still needs some scrubbing up as well.

What reference?

"Boy"? Is that what you are talking about?

What are you? Some kind of racist?
"The point is, I was chairman of the commerce committee. Every part of America’s economy, I oversighted. I have a long record, certainly far more extensive of being involved in our economy than Senator Obama does." -- John McCain, Sept 16, 2008.

He oversighted! Wow. We've gone from "The Decider" to "The Oversighter."

BTW, not that it should surprise anyone, but John "The Fundamentals are Strong" McCain was not making the above statement to take responsibility for his role in the current mess, he was actually trumpeting his "accomplishments." Even though he oversighted, somehow that didn't amount to much, apparently.

LOL Given the latest news from Wall Street, what can I say but, in the words of our current President, "Great job, Brownie!"

Yeah, we need more "oversighted" like this like we need a hole in the head.

It's a pretty tough rope to walk for John "Keating 5, but that was 20 years ago, so it wasn't wrong because conservatives believe there's a statute of limitations for right and wrong, sort of like his adultery" McCain. Either he shares in the responsibility for this mess, because he "oversighted", having been in Congress for the last 800 years, and voting with Bush 90% of the time. Or he's a do-nothing hack who, in his entire tenure in Washington, has been unable to get this mess fixed.

Maybe he was too busy listening to his lobbyist/campaign staffers, many of whom worked for Fannie Mae. Or maybe he was too busy counting the donations they were giving him (or perhaps he was just trying to count his houses.)

But I hear Sarah Palin lives near a bank, so she must know all about regulatory reform. Maybe she can fix things.

Either way, we need some change.
"But I can't come down yet and give you a specific solution [to the mortgage crisis], because I don't claim to be smart enough, but I do have some confidence in (Treasury Secretary Henry) Paulson and I'm glad to see him more and more active in this issue. I'd love to give you a solution, but I don't know." John McCain, The Keene Sentinel, Dec. 4, 2007.

(it's at about 4:06)

An a little later, to a question about whether he was surprised at the sub-prime mortgage mess: "Yeah. And I was surprised at the dot com collapse, and I was surprised at other times in our history...."

He also "doesn't know much about" derivatives and SIBs, packaging mortgages together, etc...

At the end of the interview, he reiterates that he "didn't anticipate" this mess.

So much for The Oversighter.
Re, "What reference?

"Boy"? Is that what you are talking about?

What are you? Some kind of racist?"

That's it, ladies and gentleman. Let's here it for the Unknown Blogger!

Clings to a Bible he doedn't understand and a gun he probably cain't shoot staight! The future of the GOP, ladies and gentlemen!

Too chickens--t to sign his handle, too embarrassed to wear his sheet in public!
The Real Culprits In This Meltdown
Dude, or dudette, different anonymous:

That's a great point, but it mixes things up! It's like that Bama peanut-and-jelly!

Blame corruption. Absolutely. And hang the corrupt from the highest tree, Dem or Repub. Yes.

But: the "social engineering," as policy, is something the holy market shouldhave adapted to. It didn't.

I personally think, at first blush, that, yes, OF COURSE, creditworthiness should be the deciding factor in the decision of whether to extend credit!

BUT: The Clinton "reforms" were the law, and lenders failed to live up to it.

There's plenty of greed and ignorance to go around here. But, to me, if the Clinton efforts to deracialize creditworthiness failed, then they failed because the damned market, in its unholier-than-thou hubris, failed -- failed to find a way to adapt.

I will, however, grant you this: The Clinton era always was half-assed in its "liberalness."

"Triangulation" and all.

Which is why what we need right now is utter defeat of the GOP, the mothballing of conservatism while we sort this stuff out, and a solid left-of-center Congress, and a liberal president.
Not revising, but extending "The Clinton 'reforms' were the law, and lenders failed to live up to it."

In other words, the intent was to REDEFINE "creditworthiness." Poor attempt. Didn't happen.

Next attempt needs to have some teeth in it -- the ones extracted from this faux raging beast "free" market.
If the free market works so well, why are all the financiers scrambling to get government bailouts?
One thing for sure, the GOP has now become the party in charge that "Nationalized" risk management guarantees and mortgage banking.
They have also decided to let investment banking fail and go away. In other words, in the end, our economic system will have changed as much as it did after 1929.
George W.Bush wanted to be remembered by History and now he will. That may not actually be fair, but it is what will be.
Being on the edge of the "Baby Boom", I am hearing the moans and gnashing of teeth from my peers who are losing 10 to 25% of their retirement portfolios or watch their annuities at AIG shrink down to the minimum guarantee. By November 4, they may really be in a bad mood. If they have gas to get to the polls, it is a toss up as to whom they blame for their pain.
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